How to Cash Out Cryptocurrency: Complete Guide for Beginners

Cryptocurrency is convenient, promising, and profitable, but cashing out requires caution to avoid unnecessary fees and risks. Learn how to safely and correctly withdraw your money!

What is cashing out cryptocurrency

Cashing out cryptocurrency is the process of converting digital assets into fiat currency. In 2024, this process became particularly relevant due to the rapid growth of the crypto market. In November, the trading volume of cryptocurrencies reached a record $10 trillion, confirming the high interest in digital assets.

Many cryptocurrency holders are eager to withdraw funds for various purposes: purchasing real estate, cars, repaying loans, or investing in other assets. For instance, with Bitcoin’s rise to $100,000, owners are looking for profitable moments to exchange.

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There are several methods for cashing out cryptocurrency: using exchanges, P2P platforms, ATMs, and broker services. Each method has its advantages and risks, so it’s important to choose reliable and proven services. It is also necessary to consider fees, transaction speeds, and the security of the operations.

In light of changing legislation and increased scrutiny of cryptocurrency operations, it is crucial to be attentive and informed when cashing out digital assets. Careful selection of the withdrawal method and compliance with legal norms will help avoid potential problems.

Terminology

Cashing out cryptocurrency is the conversion of digital assets into traditional money. This process involves the use of exchanges, exchangers, P2P platforms, or other methods.

Fiat money refers to familiar currencies such as the ruble, dollar, or euro. Turning cryptocurrency into fiat is important for using funds in the real world. For example, paying utility bills with cryptocurrency is challenging, whereas cashing out makes it easy.

Why cash out cryptocurrency

There are many reasons for cashing out cryptocurrency, each dependent on your goals and needs:

1. Realizing profits from price increases. If the price of your cryptocurrency has peaked, it’s a good time to lock in profits. For example, in December 2024, Bitcoin fluctuates between $35,000 and $40,000, presenting opportunities for advantageous exchanges.
2. Purchasing goods or paying for services. Many use cryptocurrency to pay for goods, but not all stores accept it directly. For instance, buying a car or electronics is easier with fiat money.
3. Reducing risks from volatility. Sudden price swings in cryptocurrencies can adversely affect your savings. Cashing out allows you to preserve funds in stable assets.
4. Repaying loans or debts. If you have obligations, exchanging cryptocurrency for fiat will help settle them.
5. Investing in traditional assets. Cryptocurrency is often converted into stocks, bonds, or real estate to mitigate risk.
6. Funding a business or large purchases. For example, to launch a startup or purchase real estate.

The choice of reason directly impacts the method of cashing out. For large sums, exchanges are more suitable, as transactions are safer but slower. For smaller transactions, exchangers are convenient, although their fees are higher.

Main methods of cashing out cryptocurrency

The methods of withdrawing cryptocurrency depend on your priorities: speed, fees, or level of security. Let’s explore popular options.

1. Exchanges. This is the most reliable method. You transfer cryptocurrency to the exchange, sell it, and withdraw the money to your bank account. Advantages: high security and low fees. Disadvantages: withdrawal may take from a few hours to days. For large sums, exchanges are the best choice.
2. Exchangers. A quick method for cashing out, especially for smaller amounts. The process takes a few minutes, and money is instantly sent to your card. However, the fees at exchangers are higher, and choosing a reliable service is an essential step. In 2024, popular exchangers offer fees ranging from 2% to 5%.
3. P2P platforms. These are services where transactions occur between individuals. You can sell cryptocurrency anonymously, choosing a buyer based on the offered terms. Advantages: confidentiality and the opportunity to find a favorable rate. Disadvantages: there is a risk of encountering fraudsters.
4. ATMs. Devices similar to ATMs allow you to exchange cryptocurrency for fiat. This is convenient, but access to ATMs is limited. Fees are above average – up to 10%. For example, there are about 15 ATMs operating in Moscow, but their number is increasing.
5. Personal transactions. If you have a trusted buyer, a personal meeting can be the fastest option. However, this method requires trust and caution to avoid fraud.

Each of these methods has its pros and cons. For large transactions, exchanges are more reliable, while for quick operations with smaller amounts, exchangers or P2P platforms may be appropriate. The choice depends on your priorities: speed, security, or anonymity.

Popular methods of cashing out cryptocurrency

Exchangers

Exchangers are a fast and simple way to exchange cryptocurrency for fiat.

Advantages:

• Convenience: the interface is understandable even to beginners.
• Speed: the process takes from 5 to 15 minutes.
• Variety: allows you to choose the best rate.

Disadvantages:

• Fees: often range from 2% to 5%.
• Risks: some exchangers may turn out to be fraudulent.

For example, Binance, ChangeNOW, and Coinmama are known for their high reliability and security. When choosing a service, check reviews to avoid issues.

Cryptocurrency exchanges

Exchanges provide a secure way to sell cryptocurrency for fiat, especially for large sums.

Examples of popular exchanges: Bybit, Binance, Coinbase, Kraken.

Step-by-step instructions:

1. Register on the platform and complete verification (typically requires a passport or ID).
2. Transfer cryptocurrency to the exchange’s wallet.
3. Create a sell order at the market or fixed price.
4. After the transaction is complete, withdraw the funds to your bank account.

Exchanges are suitable for large amounts, but processing may take from a few hours to a day.

P2P platforms

P2P services allow direct transactions between users.

Advantages:

• Anonymity: you can operate without full verification.
• Flexibility: you choose the terms of the transaction.

Disadvantages:

• Risks: potential fraud from the partner.
• Time-consuming: finding a reliable buyer may take time.

For safety, use platforms with guarantees, such as LocalBitcoins or Binance P2P.

Cryptocurrency cards

Cryptocurrency cards allow you to convert cryptocurrency to fiat right at the point of sale.

Examples of popular cards: Binance Card, Crypto.com Card.

Limitations:

• Fees: up to 3% may be charged for each transaction.
• Limits: daily or monthly withdrawal limits apply.

Cards are convenient for regular purchases but not suitable for cashing out large amounts.

Cashing out via ATMs

ATMs are devices that allow you to exchange cryptocurrency for cash.

How to use an ATM:

1. Find the nearest device using services like CoinATMRadar.
2. Select the currency and enter the amount.
3. Scan the wallet’s QR code.
4. Confirm the transaction.
5. Collect the cash.

ATMs are convenient for small amounts, but their fees often reach 10%.

Direct sale of cryptocurrency

Personal transactions involve exchanging cryptocurrency for cash without intermediaries.

Advantages:

• Speed: agreements can be made within a couple of hours.
• Convenience: there are no fees for platforms.

Disadvantages:

• Risks: high likelihood of fraud.
• Challenges: finding a trustworthy partner can be difficult.

For safety, meet in public places and use escrow services for large transactions.

Factors influencing the choice of cashing out method

When choosing a method to cash out cryptocurrency, there are several key factors to consider. They will help avoid unnecessary expenses, save time, and secure your funds.

1. Fees. This is one of the most noticeable expenses. For example, fees on exchanges usually range from 0.1% to 0.5%, while on exchangers, they can reach 2% to 5%. With larger amounts, the difference can be significant.
2. Speed. If you need to receive money quickly, exchangers and ATMs are the best options. Exchanges require more time due to data verification and transaction processing speeds.
3. Convenience. For beginners, platform simplicity is important. For example, ATMs are intuitive, while P2P services may require more effort to understand.
4. Security. The more reliable the platform, the lower the risk of losing funds. Exchanges offer a high level of protection, while personal transactions involve greater risks.

Comparative table of cashing out methods

How to choose the best option?

• If you care about low fees, choose exchanges.
• For quick withdrawals, exchangers or ATMs will work.
• If you value anonymity, use P2P platforms.
• For large transactions with minimal risks, exchanges are optimal.
• Personal transactions are suitable if you have a trusted buyer.

Each method has its advantages and disadvantages. The choice depends on your goals and preferences.

Risks and limitations when cashing out cryptocurrency

Cashing out cryptocurrency involves a number of risks and limitations that are important to be aware of in advance. Following the rules and exercising caution will help avoid financial losses.

Legal aspects

In Russia, cryptocurrency is legally recognized as property, not as a means of payment. This means that income from its sale is subject to taxation:

• Tax rate: for residents — 13%, for non-residents — 30%.
• Declaration obligation: income from cryptocurrency transactions must be reported in the tax declaration.

For example, if you sold cryptocurrency for 1 million rubles, the tax would amount to 130,000 rubles. Failure to comply with the rules could result in fines of up to 40% of the tax amount and penalties for late payment.

Tip: keep statements and documents regarding transactions to verify the origin of your income in case of audits.

Fraud and scammers

The cryptocurrency market attracts numerous fraudsters due to its anonymity and popularity. Here are the main schemes you may encounter:

1. Fake exchangers. Cloned websites of popular services are created that steal funds when attempting to exchange.
2. Unreliable buyers on P2P. Transactions may be canceled after the cryptocurrency is transferred or provide fake proof of payment.
3. Fraudulent ATMs. Devices may charge inflated fees or provide false transaction confirmations.

Tips for protection:

• Check reviews and ratings of services before using them.
• Choose platforms with escrow features (transaction guarantees), such as Binance P2P.
• Never share confidential information or wallet details with strangers.
• For large amounts, use exchanges where transactions are securely protected.

Limitations

Some methods of cashing out have their limitations that should be considered:

• Fees. For instance, exchangers and ATMs can charge up to 10% of the amount.
• Transaction limits. Cryptocurrency cards and some exchangers have daily or monthly restrictions.
• Accessibility. ATMs are more commonly found in large cities, while reliable P2P buyers are scarce in smaller towns.

Best tips for cashing out cryptocurrency

To make the process of cashing out cryptocurrency safe and profitable, follow these recommendations:

1. Choose only verified platforms. Before using any service, read reviews and check ratings. Reliable platforms like Binance or Coinbase have good feedback and provide a high level of security.
2. Compare fees and conditions. Different services offer their own terms. For example, exchangers are convenient but their fees are higher than those of exchanges. For large sums, it’s best to choose exchanges with minimal fees (0.1%–0.5%).
3. Use two-factor authentication. This is an important step to protect your account. Set up 2FA using an app like Google Authenticator to secure your funds.
4. Do not share information with strangers. Never share your keys, passwords, or wallet details with unknown individuals. Scammers may use them to steal your funds.
5. Consider taxes and local legislation. It is important to remember that income from cryptocurrency is taxable. For example, in Russia, the tax for residents is 13%. Always declare your income to avoid penalties.
6. Make test transactions. Before transferring a large amount, send a small amount to verify the service’s functionality. This can help prevent errors or losses.
7. Choose the right time to exchange. The cryptocurrency rate can change drastically. Keep an eye on the market trends and choose the moment when the price is most favorable.
8. Maintain privacy. For personal transactions or when using P2P platforms, pick public places for meetings and verify the buyer’s documents.

By following these tips, you will minimize risks and maximize the benefits of cashing out cryptocurrency.